Before we get into the meat and potatoes, I want to take a second to remind you that as you read through the prep, keep in mind that we NEVER know what a market is going to do, nor do we need to. That is not our job. Our job is to make plans for all situations so when things unfold, we don’t have to think, we just react. The key word there being REACT. These ideas are nothing more than a series of if/then statements. Also, keep in mind that ALL of these ideas will still be completely dependent on what the broader market is doing. If we start losing levels discussed on the ES/NQ, then long ideas will most likely be put on the back-burner and focus will shift to the short ideas. Always remember how important the backdrop of the broader market is to your trading.
$ES / $SPY
So far the bounce from the 50d has been nothing short of impressive. Do I think we’re out of the woods yet? No, not quite. As of the close on Friday, we have simply pressed back up into the 20d from below. Will previous support turn into resistance? Very well could. I think it’s highly improbable that we just blast back up to new highs. What is more likely is that we put in a short term lower high. But what will really matter is what happens after that. Do we pull back and start to make higher lows? Or do we head back below last week’s low? If we can start to put in the higher lows, then there is a chance that the worst is over and we can resume the seemingly never-ending bull market uptrend. If we lose last week’s lows, then I think we head down to test the 3960 area.
The 120m chart shows the levels of interest. If we shove hard into 4200 I would be willing to look at names with relative weakness for possible fades. If we flush down to 4116 I would be looking for strong names that are testing support levels for possible longs. The other levels a bit lower of interest are 4083 and the 50d around 4056.
$NQ / $QQQ
The Nasdaq has finally started to find a bid, but it still is lagging far behind the S&P. We have now rallied straight into the underside of the 50d as well as the area we broke down from last week. Even if we are able to push higher, it still faces an uphill battle with the 20d and monthly pivot looming just overhead. Any hard move up into the 20d and I will be looking for weak tech stocks that can offer a nice fade. If we flush hard down to the quarterly pivot around 13065, I would possibly be entertaining buying any tech names that have some relative strength for a bounce, but I would most likely be quick in taking profits on these types of trades until the Nasdaq really firms up. Till then, I have to play defense and protect my capital. If we lose last week’s lows, could be 200d bound.
Last week’s report said “This long needs to take this back to highs though. If it can’t and then we come back down and lose the 4/25 low, it could be lights out for the crypto-behemoth.” As you can clearly see, we have done just that. It’s definitely trying it’s best to not fall off a cliff, but you would be naive to think this isn’t extremely vulnerable here. The obvious level of support below is the 200d which also have the monthly, quarterly, AND annual pivots all congregated right around the same area. Any pops back into the underside of the 20d/50d should offer resistance. Again, I don’t trade crypto, but I follow this similar to an index in order to be able to trade crypto-related names like $MARA, $RIOT, $SOS, $CAN, etc.
Strong Stocks Looking for Continuation
The whole retail sector has been very strong. Kohl’s has the 20d and 50d bunched up right at the same spot as the monthly pivot. Any flush to that $59.30-$59.50 should be a great spot to scoop. But with the whole sector strong, you can look for VERY similar setups on the rest of the names such as $M, $JWN, $DKS, etc. The reason I went with Kohl’s was due to it having so much confluence in the same area.
The beauty of this setup is that if it gives us the flush to scoop and then it closes strong, there is no reason this couldn’t be a situation where you lock in profits for a part of the position and then swing the rest. If this were to clear over recent highs, the setup is there for an explosive move. They report before the open on Thursday morning, so understand that there is risk swinging it into the numbers. If it never gives us an entry and then the earnings report sends this over $64.16, I will be VERY interested in getting long the name on dips and seeing if it can hold a trend.
This name had a very nice Friday on some big volume. Would be looking to buy a flush to the 20d/50d around $69. This setup is VERY similar to the $KSS idea with the added gift that the earnings report is out of the way already.
The weekly chart is amazing on this name. Over $74.70 and we could have liftoff. Again, if it doesn’t give us the dip to scoop around the $69 level and then goes on to trigger the long over the recent highs, I would look to get a long on by looking for dips to hold and join trend.
Oversold Reversion Setups
Big selloff in the name after earnings came out last week. But you can see the dip went straight to the monthly 50sma and the weekly 200sma. $66 is a VERY key level moving forward on this name.
Had its first green day since the selloff, so the spigot of selling may have been shut off. The way I look to play it is to buy a flush into the annual pivot around $68.82 which lines up nicely with the hod from Thursday.
This name had already sold off a LOT prior to the numbers coming out last week. So even though the earnings report pushed it down a bit lower, I really feel like it was bound to be short-lived. And sure enough, the next day when it tested lows the buyers showed up in a big way.
There are 2 ways I would look to play this. Either a flush to the $133 area and risking under the recent lows or if we break above $142 convincingly then I can look to buy dips if they are holding and join trend.
Weak Stocks Looking for Continuation
Big breakdown last week and think at this point any pops back towards $79 are good for a nice fade. Has a $7 ATR, so make sure to account for that when looking for an entry and also considering position size that will allow you to stay in the trade and not get stopped out before you’re actually wrong.
Pot stock that recently broke some very key levels. Think $8-$8.30 area is a good spot to fade a pop.
Overbought Reversion Setups
Here is the lineup for the week.
Depending on where the numbers gap this thing, I can see a few different levels where I would play a fade of an emotional move. If we were to flush hard down to mid to low $17s, I would be interested in some scoops. If we gap up to the 20d/monthly pivot around $33.50, I would be interested in shorting the move.
If we gap up towards 52w highs I think it offers a good opp for a fade. If they slam her down towards $23-$24 I think you can be looking at scoops. But if it just gaps down somewhere in between $26-$27 I would rather be looking to short any push back into $28.60. Not a stock that typically trades a ton of volume, but on earnings day she is always liquid enough to play.
Weekly chart looks gorgeous AF on this name, which is also in one of the few sectors right now where money is clearly rotating into. The reason I like to make sure to look at the higher timeframes is because it allows me to see the bigger picture and not get caught up trying to fade something that has a super bullish setup on a weekly or monthly chart. Pretty straightforward from this name: over $142.74 and I want to be looking to get long when it starts to hold dips.
Not sure an earnings miss could get us down to $293ish or not, but that is the area where I become interested in buying.
Same level lines up almost perfectly with the weekly 20sma.
$150 is the area of interest for me on BIDU. Under $174 has an air pocket that could be enough to get us there. Level of interest to fade a spike off the numbers is way up at $228, which I almost doubt this name sees even if they beat big on the expectations. This IS the stock market though, so never say never.
What’s not to love about this name? The right sector. The right chart. All they need are the right numbers on earnings and we might have a big move starting here.
Over $18.60 and I will be looking for dips to hold in order to join trend. If they miss and selloff, I still may entertain a long on a flush down to $15.50 with tight risk under the lows from Thursday.
Target has been such a strong stock that any selloff into the weekly 20sma is a gift imo.
Daily chart shows you have the 50d lining up almost perfectly with the monthly pivot right around $199. Couple that with the psychological level of $200, and you have a pretty nice area to try to scoop a flush.
Lowe’s is the same idea as Home Depot. Weekly 20sma lines up perfectly with the recent breakout areas. Any major selloff on the numbers to this area and I will be a buyer. Keep in mind, this name will move off of the $HD numbers on Tuesday.
This name is one that will really depend on where it gaps off of the numbers. If they spike it I like either the 20d/50d/quarterly pivot area around $154 or possibly the 52w highs (if they can get it up there) for a fade. If they miss and it gaps down, I could see buying emotional flushes either into the 200d/monthly pivot around $138-$139 or if they really sell off hard possibly around the $125 area.
Cisco will also be a name that simply depends on which area they gap it to on the numbers. Only area I like above for a fade is a hard pop towards the 52w highs. 3 areas below of interest for possible longs on emotional flushes all marked in purple.
There are a lot more names reporting and plenty of them will offer great trades. But I’m going to leave it here because the idea isn’t to inundate you with a million ideas, but rather to point out the ones that catch my eye and give you insights into how I personally will look to trade them. Also, keep in mind that ALL of these ideas will still be completely dependent on what the broader market is doing. If we start losing levels discussed on the ES/NQ, then long ideas will most likely be put on the backburner and focus will shift to the short ideas. Always remember how important the backdrop of the broader market is to your trading.
Hope you all had a great weekend and I look forward to crushing it this week. Cheers.